Does Your Homeowners' Policy Cover Your Marijuana Plants?

This past Friday, IRIS Fire Investigations held a "Hash Oil Hazards Training for the Insurance Industry" seminar. The seminar focused primarily on the ways that making hash oil at home (typically using butane) can go terribly wrong, and what investigators at a suspicious fire should look for. But there was also an interesting discussion involving personal property, standard homeowner insurance coverage and cannabis plants.

The central issue revolves around the Supremacy Clause, which essentially states that the U.S. Constitution, federal statutes and treaties are "the supreme law of the land." This clause has been brought up before when analyzing cannabis law because the plant remains illegal under federal law.

Practically speaking, the Supremacy Clause hasn't affected too many cannabis consumers in Colorado -- yet. But homeowners who grow their own cannabis plants, which they're legally allowed to do in Colorado, might find themselves fighting against this clause if they lose their plants in an event that's ordinarily covered by homeowners' insurance and they file a claim to recover their losses.

Attorney David Bradley Perry discussed the Supremacy Clause and what it could mean for insurers in the room, noting that if an insurance company pays once for lost cannabis plants under a homeowners' policy, it's set a precedent that cannabis plants are legitimately considered personal property. He cautioned insurers in the room to think carefully about how to treat claims for cannabis plants.

Court decisions about whether people with personal-property insurance policies can claim cannabis plants haven't shown a great deal of variability. Perry noted that a district-court decision in Washington state, McDonald v. Farmers, held that the insurance company had no obligation to pay the claim because the cannabis plants lost in that case "did not have a market value."

Several other court cases would seem to give insurance companies legal permission to deny claims for cannabis plants. However, Perry said that in a case out of New Mexico, Vialpando v. Ben's Automotive Services and Redwood Fire & Casualty, the insurance company argued the case (one that didn't involve personal property) using the Supremacy Clause -- and lost.

The issue becomes more complicated because a standard homeowners' policy typically includes coverage for "trees, shrubs and other plants," which are covered for loss caused by "vandalism, malicious mischief or theft."

And the question of how to value cannabis plants is another tricky one. Members of the insurance industry in the room discussed the varying value of a cannabis plant at different stages of the grow process, but nobody mentioned the variation in strain value or the difficulty -- or impossibility -- of replacing a strain that an at-home grower has been honing and perfecting for years.

Insurers mentioned requesting proof of the plant's development in order to facilitate a personal-property claim for cannabis plants -- and also requesting evidence that the cannabis plants were secured as outlined in the law.

It seems burdensome to request Colorado home-growers -- who are doing nothing wrong, according to our own state laws -- to document every developmental stage of their plants in order to protect their investments. But home-growers in this state would be wise to do just that, at least until the insurance industry becomes more familiar with the intricacies of marijuana legalization.

Amber Taufen has been writing about people, places and things in Denver since 2005. Born and raised (mostly) in Colorado, she has covered the music, food, arts and cannabis beats for Westword. She works as an editor, writer, and production and process guru out of her home office in the foothills.